Unsecured debts, such as credit cards, store cards, overdrafts, bank loans and catalogues, typically have a statute limitation of six years, after which the debt becomes unenforceable.

However, it’s not as simple as waiting six years for your debt to expire, as your creditors can chase you for payments and even take you to court over missed repayments within this limitation period.

Under the Limitations Act of 1980, your unsecured debt becomes “statute barred” if there has been no contact between you and the creditor within a six-year period.

What is statute barred debt?

Statute barred debt is a debt that’s too old for the creditor to force you to pay through legal action.

Most debts in England, Wales, and Northern Ireland are written off and become statute barred after six years. In Scotland, “prescribed” is the legal term, and most debts are prescribed after five years.

Once this time passes, you’re not legally required to pay it back anymore. However, creditors might still try to collect the debt in other ways. 

Your debt will only become statute-barred after the required time period if:

  • No legal action is taken (a County Court Judgment, for example)
  • No communication between yourself and the creditor (such as an email, letter or phone call)
  • You haven’t acknowledged that you owe the money to the creditor by making a payment

In Scotland, after a certain amount of time, the debt becomes prescribed, and it no longer exists by law, which means nothing more can be done to collect it.

An example of when your debt becomes statue barred

You take out a credit card, and after a period of time, you lose contact with your credit card provider and stop payments. You then receive a letter from them to say they want you to resume payments and clear the debt.

The time period between your last contact with the creditor – whether it was a payment made, a letter or a telephone conversation – has been six years, and this means that the debt has become statue barred. The creditor is no longer allowed to pursue you for payment or take any further legal action against you.

If a creditor continues to contact you once the debt becomes statue barred then you are entitled to report them for harassment, as well as making a complaint to the Financial Conduct Authority.

Can my old debts be written off?

After a period of six years, after you miss a payment, the default is removed from your credit file and no longer acts negatively against you.

The same thing goes with debts; according to The Limitation Act 1980, after a period of six years, if the debtor has not acknowledged the debt through payment or contact, it becomes statute barred. This means that (with the exception of Council Tax bills) the creditor cannot use legal means to force you to pay a debt.

Although a company cannot legally make you give them any money, the debt still exists, and they can bother you with as many letters, emails, texts or calls as they like until the debt is paid in full.

It’s also worth noting that if someone takes legal action, such as requesting a County Court Judgement (CCJ), on you during the six-year window since you last acknowledged the debt, you are still legally obliged to pay the debt, and it will not become statute barred. If the debt in question is related to a mortgage, then the time-limit doubles, and you require 12 contactless years before any statute barring.

What happens if you haven’t contacted your creditor?

The first thing that usually happens if you haven’t been in contact with a company you owe money to is they’ll pass your debt onto a collection agency. If the original creditor cannot get in touch with a debtor, it is not uncommon for them to outsource the debt collection to someone else. As those who have dealt with them will attest, debt collection agencies tend to be much more ‘thorough’ when finding and collecting debt.

If traditional communications fail, then your creditor may take the further step of requesting a CCJ. If this is asked for, the courts will decide whether you are liable to repay the debt and set out in detail the way it has to be repaid. CCJs stick to your record and can reduce your chances of getting credit in the future.

If you’re worried about your finances or struggling to keep up with debt repayments, remember PayPlan’s here to help. You can access our help in various ways including live chat via our website or by freephone on 0800 316 1833.

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